Grazzy is a company that helps hourly employees make more money, access it same day, and save and spend in better ways. Pulse 2.0 interviewed Grazzy founder and CEO Russell Lemmer to learn more about the company.
Russell Lemmer’s Background
What is Russell Lemmer’s background? Lemmer said:
“I started my career at Bain & Company after graduating from the McCombs School of Business at the University of Texas and moved to Austin Ventures after four years with Bain. At the end of my tenure at Austin Ventures, I spent 8 months incubating “Project Silvercar,” developing the business plan, securing Audi as a key partner, recruiting the management team, and raising Series A funding.”
“At launch, I oversaw business operations, brand strategy, partnerships, and airport development while contributing to the product and customer experience. I also led a growth-hack pivot that unlocked scalable growth at a fraction of the cost, resulting in an extraordinary NPS of 84+ for four consecutive years.”
“Silvercar was acquired by Audi in 2017, and I stayed on as President and COO until 2021, when inspiration struck and I left the company to start a new venture, Grazzy.”
Formation Of The Company
Briefly describe your initial idea for the company, then tell us how your understanding of Grazzy’s value has evolved as you’ve grown. Lemmer shared:
“I was standing outside of the Wynn in Las Vegas when the idea for Grazzy came to me. I was a little embarrassed to pat my pockets at the valet stand and admit that I didn’t have cash for a tip… and then I heard the valet say to their coworkers, “that’s the fifth one today that didn’t have cash.” Giving a tip is a small moment that makes a big difference for the people who park your car, or clean your hotel room, or help you with your bags. The less people carry cash, the more often great employees not only lose out on earnings, but they also don’t get recognition for their effort.”
“As Grazzy has grown to serve every hotel brand in the U.S., and beyond hotels to restaurants, bars, car washes, salons… what we’ve learned is that unlocking those small moments of gratitude makes a huge difference for businesses that depend on great guest-facing teams. Just by helping employees earn a few dollars more per hour, Grazzy can save one hotel location thousands of dollars a month that they would normally be spending hiring, onboarding, and training new employees. Solving the turnover problem for any type of hospitality business has a major bottom-line impact, and that impact increases exponentially as we’ve helped management groups implement Grazzy across 10, 20, or 100 locations.”
Favorite Memory
What has been your favorite memory working for the company so far? Lemmer reflected:
“We are fortunate to have a team that really understands the complexities of large scale businesses, and some of our proudest accomplishments came from leaning into that expertise. We are the only digital tipping app fully approved by the major hotel brands. When we earned those nods to power digital tipping for really any hotel in the U.S., that was a big moment of validation that what we’re doing isn’t only important to the workers whose pay we’re helping supplement, but also to the businesses that are so determined to hold onto great team members and need help doing that. And to put a cap on that feeling, we have also earned the trust of the largest hotel on this side of the world, the Venetian-Palazzo in Las Vegas.”
Core Products
What are the company’s core products and features? Lemmer explained:
“We make a digital tipping platform that can deliver more tips to frontline workers at hotels, valet stands, restaurants, bars, salons, car washes… if someone is delivering a service where their customer might want to tip, we can help make sure cashless pockets don’t prevent tipping.”
“Just unlocking cashless tips can make a huge difference for hourly workers – a dollars-per-hour kind of difference – but we also take seriously our impact on the employers. Service industry jobs are extremely competitive, and great team members will go where they can earn the most for the service they provide. We give employers the power to pay their teams more without skyrocketing costs, and that can translate to a 30% increase in employee retention — thousands of dollars a month saved in recruiting, HR and training costs.”
Challenges Faced
What challenges have Lemmer and the team face in building the company? Lemmer acknowledged:
“All of the businesses we work with are delivering a tightly controlled experience to their customers, and also to their employees. We have to work within the complexity, and that means honoring the brand, the team structures and the contributions of labor unions and third-party labor providers.”
“We are the best digital tipping platform for large-scale businesses, because we’ve worked to understand what unions want for their members from digital tipping. And we’ve figured out how to make sure temporary workers still get their tips, without requiring complicated setup steps for employees who might only be onsite one time. A lot of our success comes from partnering closely with our customers, embracing the complexity they live in every day, and giving them a voice in the ways we try to solve around that complexity.”
Evolution Of The Company’s Technology
How has the company’s technology evolved since launching? Lemmer noted:
“Yes, Grazzy only launched in 2021 but the platform is significantly more powerful now than where we started, which was more of a digital tip jar. We now help employers track who their top-earning employees are so that they can coach other employees or teams to earn more tips and improve guest satisfaction. We integrate with systems like Oracle Hospitality, to make sure digital tips fit seamlessly into guest experiences, and also with backend systems like ADP and UKG, to simplify tip-outs through custom pools, automated allocation and even through payroll. Plus, we partnered with U.S. Bank to help workers get debit cards where they can hold their tips.”
Significant Milestones
What have been some of the company’s most significant milestones? Lemmer cited:
“Over the last 17 months, Grazzy has announced major integrations and partnerships with some of the most prominent companies in the hospitality (Hotel Equities, Hyatt, and IHG) and technology industries (Oracle Hospitality OPERA Cloud).”
“In July 2024 we announced a funding round of $4 million.”
Customer Success Stories
When asking Lemmer about customer success stories, he highlighted:
“We’re lucky to have a lot of excited customers who share their successes with us, and your readers can find all of that on our website, at www.grazzy.com/grazzy-stories/
“A couple of highlights:
— A New Orleans Hotel where teams earned $40,000 in tips in their first six months with us.
— A Dallas car wash chain with 21 locations that increased the tips their staff were getting by 5x.
— A hotel management company reduced turnover across their 34 locations while bringing in hundreds in tips each month for housekeepers.”
Funding
When asking Lemmer about the company’s funding details, he revealed:
“We’ve raised $8 million in seed funding since 2022, most recently adding $4 million from a set of strategic investors that included customers who are happy with the impact we’ve had and want to help us grow. There’s no better endorsement for a CEO than having a customer approach you about investing in your business, and we’re very excited about what our path to Series A looks like.”
Total Addressable Market
What total addressable market (TAM) size is the company pursuing? Lemmer assessed:
“Our TAM encompasses all U.S. hotels, of which there are more than 160,000. Grazzy also serves restaurants and bars, car washes, parking and valet operations, and other service businesses, which makes our TAM considerably larger.”
Differentiation From The Competition
What differentiates the company from its competition? Lemmer affirmed:
“Moving money from one person to another is relatively simple. Doing it at scale, for businesses with thousands of employees, some of whom are in unions or who come to work temporarily through third-parties – that’s the hard part. Grazzy is the only digital tipping company that’s built to handle that kind of scale, and that’s why we’re the only ones who won approval from all of the major hospitality brands. That flexibility is also what allows us to look at a wider TAM than our competitors and solve employee retention problems for businesses beyond hospitality.”
Future Company Goals
What are some of the company’s future goals? Lemmer emphasized:
“As we’re growing, we’ll look to expand our team so we can broaden our impact on service workers. We’re also working on expanding our footprint in the world, and have some programs in development to help workers earn more, then spend and save more wisely with financial tools dedicated to their needs.”
Additional Thoughts
Any other topics you would like to discuss? Lemmer concluded:
“We’ve covered a lot – I think what I want people to know is that digital tipping presents an opportunity to connect with your customers and demonstrate your respect for your employees. Grazzy is an opt-in service, and your guests will not feel pressured to tip. In fact, we’ve found that cash tips and guest satisfaction increase when we help service teams remind people that there are humans behind the great experiences they have at hotels or restaurants.”
